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The demand in each layer of the supply chain varies from the customer to the supplier. The quantity expectation decreases down the supply chain from the supplier to the customer. So, if something goes wrong in forecasting the demand, it may cause distortions in the supply chain.
Placing Orders in Large Batches
Retailers, in order to reduce the processing and transportation charges, increase the quantity of orders per batch. This causes misconceptions in the suppliers layer and they increase their production due to which variations occur in the demand cycle of the supply chain.
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